Rand Paul Raises Security Concerns on Broadcom-CA Deal

(Bloomberg) -- Broadcom Inc.’s proposed purchase of CA Technologies poses a national security risk and should be subjected to a national security review, according to U.S. Senator Rand Paul.

Paul, in remarks at a Senate committee hearing Wednesday, questioned whether the deal was undergoing such a review and said he would send a letter later requesting one.

Paul’s statement underscores continuing concerns about Broadcom, a leading semiconductor manufacturer that has aggressively sought acquisitions in the U.S. technology sector. In March, President Donald Trump blocked Broadcom’s hostile $117 billion bid to buy Qualcomm Inc., citing risks to U.S. national security and the nation’s development of next-generation wireless technology.

Broadcom since moved its headquarters from Singapore to the U.S. and is now seeking to acquire CA, which makes network software used in the energy, financial and defense spheres, among others.

Trump’s order blocking the Qualcomm acquisition followed a security review by the Committee on Foreign Investment in the U.S., known as CFIUS. At the time the deal was rejected, Broadcom’s relocation to the U.S. was seen by some national security proponents as an effort to work around the review process.

“Now Broadcom is about to complete the acquisition of CA Technologies, whose network systems are deeply embedded in many of our critical infrastructure facilities and national security agencies,” Paul said during Senate Homeland Security Committee hearing, addressing Homeland Security Secretary Kirstjen Nielsen. “For example, 60 percent of U.S. electric customers are serviced by companies using CA systems. Similarly their systems are used in 29 US nuclear reactors."

Paul said that just because the company had been redomiciled doesn’t mean the deal should’t be reviewed. He asked if a CFIUS review was under way. Nielsen said she couldn’t answer in a public forum.

Axios reported earlier Wednesday that Paul was calling for a security review of the deal.

The Kentucky senator’s comments also come on a day when U.S. Treasury officials issued new rules requiring foreign investors in certain deals involving U.S. technology to undergo national security reviews.

To contact the reporters on this story: Neil Weinberg in New York at nweinberg2@bloomberg.net;David McLaughlin in Washington at dmclaughlin9@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net;Sara Forden at sforden@bloomberg.net

©2018 Bloomberg L.P.